Why Celebrities Love Pot

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This week, Snoop Dogg made an appearance at TechCrunch Disrupt. (File that under sentences that will instantly date this story to the frothy, frothy mid-teens in decades hence.) There, he announced the launch of Merry Jane, a site featuring cannabis reviews, regulatory news, and lifestyle videos, opening in beta with 420 (ho-ho)participants.

Snoop, of course, is not the only celebrity interested in this nascent industry. You can already buy Melissa Etheridge’s pot-infused wine and assorted offerings from Tommy Chong and Wiz Khalifa. And Willie Nelson, the Bob Marley family, and even — reportedly — Bethenny Frankel are working on forthcomingproducts.

Why are so many celebrities clamoring to get into the pot business? One obvious reason is brand affiliation. Who wouldn’t want to smoke what Willie Nelson smokes? Or what Snoop Dogg recommends? Or what Bethenny Frankel hits? (Okay, maybe not that lastone.)

Then there is the greater-than-usual possibility for a celebrity to boost sales, by helping to carve out an identifiable brand in a still amateur-hour marketplace saturated with interchangeable mountain, stream, and farm motifs. “Everybody thinks their pot is the best, top-shelf, premium, the best pot in the universe, and they use secret unicorn poop for fertilizer,” said Ian Eisenberg of Uncle Ike’s Pot Shop in Seattle. “But we’re not just selling pot. We’re selling a retail product.” Celebrities also might help to normalize a still-stigmatized product, investors said. “Professional brands helped to fuel the end of Prohibition,” Brendan Kennedy of Privateer Holdings, which is working on the Marley Naturals line, toldme.

But the biggest factor driving celebrity pot brands might simply be that there’s a gap in the market for them to step into. Many of the usual sources of big capital for new companies — retail banks, hedge funds, blue-chip companies, and on and on — have declined to pour money into an industry that is still federally illicit, and could be wiped out in an instant by a President Fiorina or a President Rubio. Sure, there are a number of venture firms investing in pot businesses, among them Tuatara Capital, which is investing in Willie’s Reserve, and the Peter Thiel–backed Privateer. But businesses in Colorado, Washington, and other states have complained that they are still starved for capital. That makes high-net-worth individuals an unusually important source offunds.

Moreover, it is still attractive for those high-net-worth individuals to invest in marijuana companies, given that the market is filled with thousands of small players looking for cash rather than being dominated by a few big, aggressive, well-capitalized firms. (In that sense, it resembles the chaotic market for restaurants a lot more than it resembles the mature market for beer, wine, and cigarettes.) Marijuana investment firms and clubs describe being inundated by mom-and-pop pitches, as do individual investors. Many celebrities have cash to burn and a better-than-normal chance of making a killing, given that there are relatively few other investors crowding themout.

In short, marijuana businesses need branding and cash. Celebrities are great at branding and flush with cash. It all adds up to an unusually good alliance between the famous and thedank.